The Doctors’ Lounge
Where scalpels meet systems — and physicians say what they really think.
Co-hosted by Anish Koka, MD & Anthony DiGiorgio, DO. Candid talks on healthcare policy, reform, physician autonomy & patient care.
The Doctors’ Lounge
Drug Pricing, Broken Incentives, and the 340b program Fixes Washington Won't Touch
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Episode Summary
Ryan Long — former senior policy advisor to Speaker Kevin McCarthy and current non-resident senior scholar at the USC Schaefer Institute — joins Drs. Koka and DiGiorgio for a deep dive into the structural failures driving American drug pricing. The conversation covers the list-to-net price bubble and why patients pay cost-sharing on a fictitious number, how the IRA's price-setting mechanism disincentivizes both new drug development and subsequent indications, and why the 340B program — sold politically as a lifeline for safety net hospitals — systematically funnels the most money to wealthy health systems with high commercial payer mixes. Long argues the fix isn't tweaking the formula; it's scrapping the drug arbitrage mechanism entirely and replacing it with a direct, transparent grant program that actually reaches the hospitals that need it.
Chapter Markers
00:00 Introduction — Ryan Long's 25 Years in Health Policy
02:08 Drug Pricing 101: List Price vs. Net Price and Why It Matters
06:39 GLP-1s as a Case Study: Insurance Pullback and the Price War That Followed
11:17 The Medicare Bridge Program and Government Price Setting for GLP-1s
14:11 Why Drug Companies Set List Prices High at Launch
16:10 The Inflation Reduction Act: Price Controls, Rebate Penalties, and Innovation Risk
20:57 Brand-to-Brand Competition and the FDA's Role
28:52 GLP-1s Under Medicare: Is the $50/Month Bridge Program Good Policy?
36:50 The Medicaid Drug Rebate Program and the Best Price Provision
38:08 The Origins of 340B: What the Program Was Actually Designed to Do
42:24 Qui Bono — How 340B Revenue Is Really Generated
50:17 Contract Pharmacies and the For-Profit Middlemen in 340B
56:31 The Humira Biosimilar Case and the Rebate Trap
1:02:58 The 1987 Supreme Court Case That Supercharged the Rebate Structure
1:05:26 Broad Reform Proposals: From 340B Overhaul to Consolidation
1:09:19 Closing Thoughts and Where to Find Ryan's Work
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@anish_koka and @drdigiorgio
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@drsloungepod
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You like your healthcare plan? You keep your healthcare plan. Nobody knew that healthcare could be so complicated. It finally beat Medicare. This is the Doctor's Lounge. Welcome to the Doctor's Lounge. We are here with Ryan Long. Our guest today is former senior policy advisor to Speaker Kevin McCarthy, and he's currently a non-resident senior scholar at the U.S. C. Schaefer Institute. Uh Dr. Ryan Long has over 25 years of Capital Here and Hill and Health Policy experience. He has been doing a lot of his recent work on drug pricing, including one of my most favorite topics of all. Anyone who has listened to the show knows how much I hold this topic dear. And that, of course, is 340B, which I'm sure we will get into and talk about. But first, Ryan, welcome to the show. And to give us a little background about your history. How did you get involved in healthcare policy and drug pricing?
SPEAKER_00Yeah. Well, I appreciate you uh inviting me on. Thank you. Uh I I got involved in healthcare policy. Um, my my first job out of college was uh with a congressman from Georgia. He sat on the Energy and Commerce Committee. He was a dentist, uh, and he was one of the sort of the the leaders in the patient's bill of rights debate uh of the late 90s, Charlie Norwood. And from there, uh I went to go work for a congressman from Texas, Joe Barton, uh, who eventually became the Energy and Commerce Committee chairman that has jurisdiction over things like 340B, but also Medicare, Medicaid, FDA. I worked uh at the committee when he became chairman uh for a while, and then uh came back to the committee in 2018 to work in the sort of the senior office, and then in 2021 went to go work for Kevin McCarthy when he was a minority leader, and then again when he was speaker. So through that time, had the opportunities to work on things like the Medicare Monerization Act, a couple of different FDA user fee reauthorizations and from the minority side, the ACA and and the IRA. So I've seen it from from sort of both sides, and as this debate's gone up and down and every which way. So it's been fascinating.
SPEAKER_02So drug pricing, it's a very simple topic. I'm sure we can cover all of it in about five minutes and make it digestible for our audience, right? I find it incredibly complicated because you have on one side, you have a lot of product regulation that goes through, right, FDA, patent protection. And then on the other side, it's a highly price-regulated industry, right? You so you have things like Medicaid drug rebate program, 340B. So how do you reconcile the two? And what do you think, just kind of broadly writ large, what would be your prescription for introducing more competition and better price signals into the market?
SPEAKER_00Well, I mean, I think ultimately it's one of the biggest things is a distortion between the list price and the net price. Patients have to usually pay their coinsurance based off of a fictitious list price. I don't see why you couldn't have insurers and PBMs negotiate upfront discounts uh that is more transparent where people, when they go to the pharmacy count or their coinsurance is based off of that.
SPEAKER_02So let's actually take a step back and even I think there's a lot of acronyms and things that get thrown around in in drug pricing, right? So you talk about list price, there's wholesale acquisition cost, there's net price, there's spread pricing. What do all these mean? What are the important ones that you think anyone trying to digest drug pricing needs to know?
SPEAKER_00Well, I think on the uh for the average person, it's in the biggest ones are list versus net. And when you see X company has increased their price by six or seven percent, that's usually the list price. And if you want to make an analogy, it's like the sticker price for a car. That's never the price you pay, right? That's just the price that they want to advertise off of because usually they want to give you a discount because you feel like you're getting a deal. And that deal is on the drug pricing side, is that net price. So what happens is PBMs, pharmacy benefit managers negotiate with uh manufacturers on usually rebates, and that's after sale, sort of at the end of the year, they determine the volume that they've sold, and then they give a rebate back to the PBM. But again, what happens is that list price is usually the number that people have to pay their cost sharing on. The other problem is it really distorts public perception of drug pricing. Like I said, and you have a six or seven percent increase, people say, oh, well, the drug's going up six or seven percent. I think a perfect example of that is you know, there's big debate, continuous debate over insulin prices. Well, on a net basis, insulin has really either held steady or gone down since 2016. It hasn't increased. Now, there were a dramatic drop in the list prices for uh for most insulin products in the end of 2023. Um, but that goes to your other point. There are so many government rebates and government price settings that uh it really also distorts the market. And that's things like you have to have compulsory rebates in the Medicaid program. And then if a price increases beyond a certain amount, that rebate goes up. And then you have 340 B that you are required to provide discounts to what started off as 90 hospitals when the program started or 90 entities, and now it's 2500. You also have, you mentioned what are some other acronyms. There's average sales price. So average sales price is what you use in Medicare to determine physician-administered drugs and what will be a reimbursed for them. That's different than what we use in Medicaid, which is average manufacturing price. So there are a whole host of different acronyms, uh, all of which probably are distorted. But I think the biggest is that list to net bubble is probably the most distorted, both because of sort of the impression it provides the public on what's happening on drug prices, but also a bigger uh issue being uh what they pay their cost sharing off of. Which leads to you end up paying more as a patient getting your drug than you should based off your formula, because you're paying, let's say, 20% off of a much higher price.
SPEAKER_01It's so hard to get lost in uh lost in the weeds, especially you can imagine a patient kind of trying to listen to stuff like this, right? Because at the end of the day, they just want cheaper drugs. And I'm a cardiologist who uh ends up prescribing a fair amount of GLP1 drugs because I have a lot of high-risk patients that are really just the toxicity of weight causes all sorts of different issues. So it's been an interesting trajectory in terms of watching what's happened with the GLP ones, right? Just to give folks a little kind of a concrete example. When GLP1s first came out, Wagovi, Azempic, Monjaro, Zetbound, they essentially came out with a list price of around, and they still have, I think, a list price of $1,500 a month. And of course, there was a reasonable there was a reasonable amount of coverage initially. Medicaid was covering it, and there was a bunch of commercial insurance companies were covering this from a weight loss perspective, from a diabetes perspective. And that was, of course, creating the illusion that these drugs were pretty cheap. If I mean they were you were getting them from insurance with a pretty minimal copay or whatnot. And then of course, over the last year and a half or so, a large number of insurance companies have just dropped coverage for this, right? And it's been an interesting conversation with with patients to say, Doctor, but I have sleep apnea and my BMI is this. Like, you think I need this drug, right? And I'm like, yeah, I think I think this drug is is very much indicated for you and you'll benefit from it. So like, why is the insurance company not covering it? And it's that conversation of saying, well, the decision to cover things isn't completely based on whether or not this is clinically of utility to you. It's based on math, right? They're running a business and they've decided that they can't cover it. Now, interestingly enough though, as the insurance companies stopped paying and stopped covering for this, and not to say this was the only thing that was happening, the the price that patients could pay for this not through insurance started to drastically come down. And there was a price war. And just to show to show folks that when third parties actually step back, you actually get things that are better for consumers because suddenly you had a little bit of a price war that happened between the two makers of the two big GLP ones that were on the market, Novo Nordisk and Lily. And uh, yeah, I mean, uh Lily had lots of market share, and so what did what did Novo Nordisk do? Which uh they undercut the price. And so, and the first two months you can get for $149 a month. Again, the the list price of this, if you try to pay cash price, even now it's fifteen hundred a month. First two months now is $149 a month, and then after that, for uh Wagovy, it goes up to $399 a month. But all of that, interestingly enough, is only available through a discount program, right? Where you have to show the pharmacies um you either could get it directly through the cash pay Lily direct price, uh, and then through good RX, Trump RX, some somehow or the other, it's now the case that if you get a coupon, there's a coupon that allows you to pick it up from your local CVS for those discounted cash prices. So interestingly enough, in about a month or so in July, there's the bridge program that is starting. The bridge program is going to get allow Medicare patients to get these drugs for $50 a month. So it's a very complex set of things that seem to be happening. I thought things were heading in the right direction, actually, counterintuitively, when third-party payers were pulling back and prices were just dropping a significant amount. Do you think that this next move, which is this bridge program that allows Medicare patients to get it for $50 a month, how do you think that is going to impact on what the prices are, the cash prices that folks can pay for this drug?
SPEAKER_00Well, obviously, I mean that you know you segment from the Medicare market to those people. Wait, before you answer that, actually, sorry.
SPEAKER_01Can you explain what exactly do you have a knowledge of what the Medicare bridge program is and how exactly that's happening?
SPEAKER_00And I've been following more on the commercial side. That's fine. That's fine. No, please go ahead. What do you think about the I think what you brought up, there are just so many different facets. You say um and it and it goes beyond drug pricing. Uh, one of the issues is uh third-party payers and their effects on overall healthcare costs, whether it's drugs, whether it's an MRI or what have you, and you see where you can pay cash for a particular service, it ends up being multiples lower than what's being charged through your insurance. And you've seen that also even in surgeries, where you have surgery centers is a famous one in Oklahoma hospital. Uh, they post their cash prices, they're much lower than you would get in a hospital next door when you're going through insurance. And so I think that that's definitely a component. I think the other thing that I picked up from your comment is you mentioned the competition between Novo and Lily. Um, and I think that was also one of the overlooked facets of the IRA, the drafters of the IRA just thought competition was brand versus generic. And they didn't take into account that brand-to-brand competition is a real thing. And if we can get more brands in the same sort of class or therapeutic area, that competition's gonna bring down price. I mean, the most notable example of that is uh the Hep C treatment from about 10 years ago. Uh, when the first one came out Sivaldi. Sivaldi. When the first one came out, everyone says, okay, it's gonna bankrupt the program. Now, there was a large warehousing of patients that were waiting to get the improved product, um, which was Sivaldi. But once I believe it was Merck and uh was it Av V was the third, uh, but there was a third that came out, the prices of the the Hep C treatments just went down dramatically. And so there is brand-to-brand competition that can't help. Now, brand-to-brand competition combined with something like SAs, where consumers are actually or manufacturers are actually competing with consumers on price and quality rather than some of the distortive effects of third-party payment, I think those two things could dramatically reduce drug costs.
SPEAKER_02So when a drug company comes out with a new drug, say blue sky drug, no comp no competitors for this special class, why do they set the list price so high when they know that's not what they're gonna get paid? Right. So is there a strategy to that? Because it certainly makes them look bad, right?
SPEAKER_00Yeah. Well, I I think what happens is they know that they're going to it's it's a new product. They're gonna have to provide a really big rebate to initially get on formulary, right? So let's say it's a $1,500 list price of a drug, they're gonna have to provide a big rebate to one of the three PBMs in order to get on formulary initially until they can provide more data on sort of how the the value of the product to the overall insurance plan. And so I think that's really what happens initially at launch. Now, I think you also have another factor with the post-inflation reduction act, and that was the rebate inflation penalties. And so now there's also a another incentive to price high because you're the amount that you'll be able to increase your price in the future, regardless if you get subsequent indications for the drug, is limited.
SPEAKER_02So the the IRA made it so you can't increase your drug price later or or you face a penalty, is that right?
SPEAKER_00More than inflation, more than CPI on an annual basis. And so I mean that was one of our concerns with the the Inflation Reduction Act was it's potentially going to disincentivize uh manufacturers for looking at subsequent indications of drugs. And I mean you're you're the doctors. I think you know that a lot of the best indications or most effective indications for certain treatments are aren't the first ones, they're they're they're the subsequent ones, particularly in the cancer space.
SPEAKER_02Yeah, we use a drug off-label a lot, company realizes it, they run another trial, they get an FDA indication for that what was previously off-label. So pre-IRA, a company could do that and increase their price. And you're saying post-IRA they can't or they get hit with this penalty if they go above inflation.
SPEAKER_01Yes. So sorry, could you go through uh the Inflation Reduction Act? Could you talk about why you felt strongly that it was the wrong move and actually raised the effort was to help control costs of of drugs, right? Uh both to Medicare Part D, which I mean the costs to Medicare Part D have just ballooned an insane amount. So the uh the effort was to cut costs and control costs, right, by setting some cap based on the 10 most prescribed drugs. Could you go through why you felt strongly that this was only going to raise the cost to Medicare?
SPEAKER_00Aaron Powell Well, I think that there was a thought it was going to raise the launch prices of drugs. It would year nine, year thirteen, it would reduce the cost of some drugs. How effectively, we don't know. But I think one thing we do know is we call it a negotiation, and that's kind of a that's a misnomer or euphemism. Price setting, right? Yeah. I mean it's the all of the power is in the power of the secretary. I think what we had concerns over the rebate uh penalty and what that would do to looking at subsequent indications, how it would affect the launch price, again, the overlooking the fact that brand-to-brand competition does bring down prices. And it's all balanced on it is very expensive and it is very risky to develop a new drug and to get a new drug to market. A drug that enters the first in a human phase one trials has a 90% failure rate. And that sort of that rate decreases as you go through the different phases, but the cost of doing a phase two drug is much higher than a phase one and a phase three drug in a population that may have a sort of a large population of people that have that disease, those can be hundreds of millions of dollars. So you're talking about a 10 to 12 year process and a failure rate of 90% for particular indicate or particularly for diseases that we do not know or we don't have a firm grasp on the medicine and the biology of the disease, something like Alzheimer's failure rates are very, very high. And one of the questions we had is we're not, we don't think that innovation or RD investment will go away, but will it migrate to other areas? Are people going to migrate to areas in where the biology and medicine are much better understood? Um, the regulatory pathway to approval is much is better understood than risky type diseases where there's an unmet medical need, but the failure rate's a lot higher. You could invest billion, two billion dollars and have nothing to show for it, that people may go into to areas that aren't producing drugs that we need to treat diseases that don't have a current treatment because it makes more sense to go to to somewhere that's less risky. And so there are covenant factors anish on on what we thought was problematic with the IRA. And then on top of that, you might mention part D. Yeah, I think that there was bipartisan agreement that part D had to be reformed, that the cost of catastrophic, the catastrophic portion of the uh benefit, particularly after 2010, was increasing dramatically. But when they decided to go out on a loan, they they decided, you know let's put a very low catastrophic cap in there. Let's even say you don't even have to spend $2,000, you can spend $600 and reach the cap. That just that was something that I'm not sure that they really uh talk to underwriters about. And to me, that's probably the biggest reason why we've seen this massive increase in Part D premiums.
SPEAKER_01Yeah, I mean, I I guess it's interesting because with what's happened recently at the FDA in the last two years, it does seem to be fairly clear that we have an ecosystem in the drug development space that does really incentivize kind of Me Too drugs, which I guess is not a bad thing because the more Me Too drugs you approve, the more you have competition among branded products. I mean, the only real way to bring down the cost of branded products and kind of a free market approach that doesn't involve someone using the mafia of the state to set prices. The only way to really bring prices down is to have more competition and have more branded drugs that get approved. But I guess one of the issues that I always was a big believer in are institutions. I don't know if your faith has eroded in terms of some of the institutions that should be doing just science. There seem to be some issues. I wonder if you have any comments on whether or not the FDA is actually functioning to approve the Me Too drugs that work. For instance, the Moderna vaccine, the mRNA vaccine that may be going through now. There's some given the billions of dollars that are at stake, there's some very interesting decisions made with regards to what's the comparator to get the drug to market. Meaning you've pick a very, very weak comparator. I don't want to get into details, but essentially it's gaming the system to get something that is equivalent to something that's very bad, and then you get it on the market, and now it's FDA approved, and now there's a mandate to pay for it. Yeah, your your framework does rely on a working FDA, does it not?
SPEAKER_00Yeah. Uh yeah, I I can't speak specifically to the Moderna thing.
SPEAKER_01I know that that's Yeah, no, no, not specifically. Just I was just But generically, your your framework relies on an FDA that works that's approving drugs that are effective, that they actually are Me Toos that are doing what they say they'll do, like they'll prevent the flu or they'll prevent whatever.
SPEAKER_00Yeah. Well, I mean, I generally have uh quite a bit of confidence with the FDA over the years. Uh I do think uh you look at uh Me Too drugs versus sort of novel drugs and a new indication. And I think one of the things a disease that doesn't have a current therapy, I think that there's a higher bar for a Me Too drug just because FDA is supposed to evaluate something on a risk-benefit framework. And if you already have a a drug out there, then sort of that risk-benefit calculus changes. Now, for someone that has a disease, a potential cancer, where there's no treatment or the treatment that we know doesn't work uh very effectively, then that risk-benefit framework changes dramatically. And I think patients particularly with a fatal condition or a condition that leads to sort of dis irreversible disability, they're much more willing to take risk than sort of a disease that may be uncomfortable or aggravating, um, but not fatal or debilitating.
SPEAKER_01Right. The uh go ahead. Sorry. Do you feel that do you think that uh so the IRA essentially is a little bit of a non-starter. I mean, I it was not happy with the fact that they were setting prices and stuff. And it it leads to some anyway, it leads to some interesting things in terms of there are there was a joke.
SPEAKER_00We were going through this process. Yeah. And this is, I guess, one of my biggest concerns with the the IRA is the Congressional Budget Office and their estimates carry a lot of weight when you're going through the legislative process. And um their assumptions were there there would be no politics involved in the negotiations. Of course, they wouldn't sort of demand a much lower price because they're going to be objective and again, apolitical in their decisions. And I just think that this is an assumption that I disagreed with vehemently. Uh, I don't see how you can provide that type of power with the hammer of an effective tax rate that's over 100% of sales, and politicians not use that power.
SPEAKER_01Okay. So I want to make it, I want to make it concrete in terms of okay, so the IRA is bad because and I think most everyone here on the panel would agree that IRA is not good because setting prices is not good and it creates lots of issues. You may you may be setting the price too high, right? That was one of my points because Eloquist, one of the drugs on the IRA list, which is one of the most common drugs, a pixaban, one of the most common drugs that's uh prescribed. It was like two or three times the price of a substantially equivalent equivalent generic. So uh anyway, so that there's that, of course. And then of course, there's you could set the price too low, which then creates an issue in terms of innovation, future drugs that are lost and lost and whatnot.
SPEAKER_00Well, one of one of the things they are doing is talking about setting it too low, is they say that they use a comparator drug when looking at the drug that they're going to put the price control on. But often the comparators are are drugs that are generations behind the new innovative product. And to me, that's a big problem. And so just determining what that comparator is, very difficult and could lead to severe distortions.
SPEAKER_01Right. But sticking with the GLP one example that I gave you, because there are many, many Americans that are very interested in what what's gonna happen to GLP1 prices. And so this bridge pro bridge program is something that just to give you a little bit a few details about it, it's uh I think I'm getting most of the details of this correct. And now you can give me your opinion on what you think about what's happening here. Medicare patients are gonna pay fifty dollars per month for this, all right? That the federal government has basically said that we will pay you, manufacturer of GLP1s, which is right now Lillian Nomanordisk, $245 per month for these medications. All right. It's some rebate thing where it's $600 and then there's a rebate that is given from the manufacturer to the government. But essentially that's what happens. So the government is saying it's going to be $245, is what the price that we have negotiated, as much as you negotiate with the government, for this drug. $50 is going to be paid for the patient. So basically the government is on the hook to pay $190 per month to the GLP1 manufacturers for the Wagovie and uh Zapbound. The current list price, like I said, is $1,500. I think the current WAC price is something like $600 or something. So what are your thoughts on what the current administration has done with regards to this?
SPEAKER_00Specifically on GLP1s?
SPEAKER_01Yeah, I mean, just given like so they've basically they've negotiated a price that's much lower than $245. And again, the patients are going to share in $50 a month, which is significantly lower than the current. Currently, if you go through the direct pay cash program, it's $500 a month for Zetbound and it's $399 a month. Okay. So now we are they've reduced the cost to $50 a month to the patient. And that based on the fact that the government has negotiated a $245 net price that they're going to pay to the manufacturers.
SPEAKER_00So do you favor that type of price setting? Well, I wouldn't you're a cardiologist, you see a lot of these patients. Um do you think that GLP1s are beneficial to uh a majority of the patients that let's say have a BMI over 30%? I think that the label 30. I think it's 30.
SPEAKER_01Yeah, a BMI or 30, or if you have a yeah, certainly if you have some you know risk factors that make you see a cardiologist.
SPEAKER_00Yeah, yeah. That it make it becomes even more beneficial, yes. Yeah. So one of the things that makes this a little bit different is the fact that uh so the Medicare Modernization Act, which created the Part D back in end of 2003, we were coming off the late 90s of FENFEN, right? And so they put in a prohibition on Part D covering weight loss drugs because they were looked at as sort of cosmetic drugs, not necessarily sort of part and parcel of providing healthcare. And so they had this prohibition. So I think what happened here was um they were doing it through a demonstration project and not through the Part D program. And so that had to probably come with uh maybe differences in how they would approach it if you didn't have that prohibition and it could be done through Part D. And so the particulars of how they came up with the 245 uh had I I would have to look into a little bit more. But I think the other thing about what GLP1s are so fascinating, we talked about the IRA as well, is I look at what we want, hopefully at some point. One, Lily is developing a pill instead of a shot. And that presumably will broaden access. I pose the question to someone if we were 10 years down the road and it was 2036, they hadn't already gone through the the long, arduous process of developing the pill, would they have done that? Because going back to that would be the same drug, they would be negotiated after, I think, chemical drugs, so after nine years, they'd have the the rebate inflation penalty. So I'm not sure that they would do that. Which to me, the bigger question is, and I would think love your opinion on this. What we want out of GLP ones at some point is long-lasting durability after taking it for a certain period of time. So right now, there are some people they take it for some period of time and then they'll wean themselves off. But um, for most people, you got to continue taking it, right? And so for our healthcare system, I think if we can reduce obesity rates, that's fantastic. That will help, that will improve health, that will improve the financial condition of some of our public uh programs. If it's something that you can take for, let's say, six months and then you have durability going forward. I do worry that we're potentially cutting off our nose despite our face when it comes to um sort of being able to develop new indications and new products that can help with the again improve patient uh outcomes, improve the financial outlook of our public payer programs, but we may disincentivize companies from doing that.
SPEAKER_01But in this particular case, by the way, yeah, medically I agree it'd be nice to have something that you want durable weight loss, however, whichever way you get it. Of course, it's not necessarily fantastic to be on a med for the rest of your life to get durable weight loss. And do you want a drug that's effective for the rest of your life? Like you want to, if there was a gene editing thing that would make you lose your appetite every time you looked at food, do you necessarily want to edit your genome? So I don't I think you would love something that would change behavior without being there. But right. To get back to what we were talking about in terms of is this necessarily because we the implication in your question is that by price setting in this manner, that this is actually not going to be good for the manufacturer because the price is set too low. But remember, right now, I have the vast majority of my Medicare patients that the ones who are who are unable to get to that $2,000 cap, right now, Medicare Part D folks are capped at $2,000, right? So if you make it to $2,000, if you pay out $2,000, then you're done. And interestingly enough, there's a program through Medicare where if you know that you're all the drugs that you're on is going to be more than $2,000 for the year, they'll just set up a payment plan to take $2,000 divided by $12 and you pay per month.
SPEAKER_00You call that smoothing. Right.
SPEAKER_01Yeah. So it's very interesting. But the point is there's a large portion of the Medicare patient population right now that does not have any access to this GLP1 drug. So they are, in many cases, sicker, have lots of comorbidities. And so this does give them access at this rate. So is it the case that it'll be worse for them? Will their profits go down? You're not setting a price. This is not going to be a price that necessarily applies to the commercial markets, right? They still are going to have this cash rate of $500 in the private markets. The market has essentially dictated $500 a month or $350 a month. That's around where it is. So Medicare is segmented and they have this $245 a month, but that means the federal government is basically saying we will reimburse $190 a month for every Medicare patient that you feel needs a GLP1. That may not be a bad thing for these folks. And so it's not necessarily a given that doing this means they're not going to get money for RD to create better, ever better, and ever newer drugs.
SPEAKER_00Well, I again I think in this instance it is kind of unique because you do have the prohibition in the Medicare statute. Part D can't cover those. And so this was the the way to allow coverage for those people. And you'd have to speak to the companies, but I would also think that if you're giving them a market of 60 million people, that's helpful.
SPEAKER_02Yeah.
SPEAKER_00Yeah. It's pretty clear.
SPEAKER_02And Medicaid is a totally different story with that because you don't have each state can make their own coverage determinations, basically, for pharma. Uh and then you have the massive distortion of the Medicaid drug rebate program, right? And so that includes that that nice famous best price provision, right? And you want to explain briefly what that does?
SPEAKER_00Well, yeah, that may dovetail nicely into a 340B conversation. But don't don't telegraph where I'm going.
SPEAKER_02It's not that simple.
SPEAKER_00Well, so in 1990, Congress passed the Medicaid drug rebate program. And basically what that said is you have to give Medicaid the best price you give to any other payer. And so you have to provide rebates back to the state of 23.1% or the best price, whichever is greater. And then they have inflation rebates in there as well, where you could get to the point where if it's an older drug, the price is dramatically lower even in 340B program, potentially even a penny. Right.
SPEAKER_02And so the way I understood that the 340B program was then created in response to that, because a lot of drug manufacturers would give safety net hospitals a huge discount on medications. Once you install that best price provision, now if they give, say, local county hospital a 95% discount on the drug, they have to offer that discount to every state Medicaid program in the country. Is that correct?
SPEAKER_00Yeah, that's correct. And so after the rebate program was passed in 1990, they stopped doing that. Because if they did give those really steep discounts, they would have had to give that discount to basically every Medicaid program in the country. And so Congress came back in 1992 when they passed the 340p program. They said, hey, if you want to participate in Medicaid, you have to give the this small number of truly safety net entities, you know, this the steep discount. At that point, it was about 90. Now it's about 2,500. Now, interesting during the 90s, right?
SPEAKER_02You say 2,500 entities now.
SPEAKER_00No, I think it's 2,500 hospitals, and if you want to count all the child sites, it's exponentially more than that. Yes, exactly. But uh the Medicare Modernization Act, they did something, they said, well, why don't we just uh exempt Part D negotiated drugs from best price because you'll be able to get a better deal. But if they're subject to best price, there's only so much that they will uh get lower their price to get on formula in Part D. But yeah, so going back in 1992, they passed that. Again, it was a very small program at the time. So any sort of flaws of the program were amassed by how small it was.
SPEAKER_02Right. And so the 340B program essentially was meant to help safety net hospitals and their patients. And not only that, the it was the the grantees, right? So the Ryan White clinics, the F Q HCs, I believe, are included. Those, and then you have a separate category, which are hospitals that have a disproportionate share percentage, which means they see a certain percentage of their inpatient days are essentially Medicaid or low-income patients. So this program was meant to benefit essentially the safety net and safety net patients. And of course, the intention has matched up perfectly with what the results of the program had been uh since it was passed, right?
SPEAKER_00Yeah. I mean, it started with a very small number. I kind of divide the program into two different periods, 92 to 2010, and then 2010 on, because that's what was there a major healthcare legislation around 2010?
SPEAKER_02I I forget back then.
unknownYeah.
SPEAKER_00I was still in mid school. Well, you know, it's interesting. You mentioned the the dish percentage. So if you become eligible at a if you have that dish percentage of 11.75. So in 1992, the Medicaid program was a lot smaller. So if you're a hospital to reach that percentage, uh maybe that was not a high bar, but a medium set bar. But when the program has doubled and tripled, but you didn't adjust that 1175, a lot more uh hospitals became eligible for the program. And then the other thing that was not part of the ACA, but it was done around the same time, was you had these safety net hospitals. Most of them had an in-house pharmacy, some did not. In 1996, HS said it, hey, you can have one outside pharmacy to make sure that your patients have a place to go to get their drugs. Now, when I say I break it up before 2010, the other the other reason is the hospitals, when discussing the issue up on the hill, they would say it is unfair for us as a truly safety net hospital to have to bear the full cost of providing these drugs for free or heavily discounted to uninsured patients. And so that's why we needed and pharmaceutical give us his discount, which again, if you're talking about a limited small number of truly safety net hospitals, that probably makes sense. Well, since that time and since 2010, really the rhetoric has changed. And it's no longer about providing uh drugs to uninsured patients or uh patients that can't afford their drugs. It's really about how they generate revenue for holistic hospital operations or other things.
SPEAKER_02So how does how does the I love the title of your of your paper? Anyone should go look it up, it was published at USC uh Schaefer, Qui Bono, right? I I had to brush up on my Latin there. It means who benefits, right? So who does benefit and how do these hospitals generate so much revenue off of the 340B program?
SPEAKER_00So I think that's the biggest myth of the 340B program is that the um the entities that get the line share of the benefit are truly indigent safety net hospitals, whether they're in urban areas or rural hospitals, they claim that it's those people that have large percentages of compensated care, uninsured payer mix, large percentages of Medicaid. But the program works the exact opposite way. You maximize revenue when you have large amounts of commercial payers. And you minimize, you want to have as few uninsured patients as you can, and you want to be at that dish threshold, but just barely, because you don't make a lot of, you make some off of Medicaid drugs through 340B, not a whole lot, but you really maximize your revenue when you have a high percentage of commercially insured patients. Because what happens is you buy it at a very low price, and then you get reimbursed by the payer at whatever their customary reimbursement rate is. So obviously, if uh the patient is uninsured, they're not paying anything, you're not getting reimbursed anything, you're probably losing money. Medicaid, again, they're paying you more than the acquisition cost of the drug, not by much, but you can you'll make some money. Medicare actually, a CMS looked at this back in 2018, and they were getting paid uh ASP plus six when the acquisition cost for 340B was actually minus 22% of ASP. But then commercial insurance pays exponentially more than Medicaid and certainly much more than Medicare. And so what they want to do is go out and uh have as many commercial uh payer patients as possible. And that's why you've seen stories in the New York Times, Wall Street Journal about hospitals. They go out and they buy a physician practice, independent physician practice. When they are independent, they didn't get access to 340B. When the hospital buys them, they start to get uh access to 340b prices and so they can start generating revenue. And what they do is they they're more likely to be doing that in areas that have high amounts of commercial payer mixes, because that's how they can maximize revenue. So again, it's really the exact opposite. Poor hospitals get the least from the program, and richer hospitals get the most. And I think a lot of the people that want to keep the status quo don't want people to understand how revenue is generated and what are the characteristics of a hospital who can actually maximize 340 B revenue. It's really the very large hospitals with a lot of commercially insured patients. I mean, I was talking to Anthony before this, and California hospitals have to report a lot of information to their healthcare agency. And you can look at payer mixes from different hospitals. And uh you mentioned I work for Kevin McCarthy. He comes from the Bakersfield area, Kern County. Yeah, the Kern County hospital has a commercial payer mix that's less than 10%, and I think their Medicaid percent is well over 70%. Whereas you have some hospitals in suburban Los Angeles that are 340 B that have commercial payer mixes above 50, hardly do any uncompensated care, they're barely above the disk threshold. That's the hospital that's making the most from the program. I think that's the exact opposite of what most policymakers think.
SPEAKER_02Right. And so it it really benefits the large, wealthy hospital systems that have a lot of child sites and clinics in well-insured areas. I think the I love the Minnesota's reporting because they have some pretty good transparency as well, too. Of the 340B revenue, 53% came from commercial insurance, 31% from Medicare, and 14% from Medicaid. And so they're even they're making money, they're making spread money off of Medicaid too, which I think also was not the intent of the program, right? Because essentially there's this prohibition on dual discounts. So if a 340B drug is given to a Medicaid beneficiary, that Medicaid drug rebate we mentioned previously now cannot be reimbursed to the state. So you're essentially taking money out of the Medicaid program from the state, putting in the pocket of the covered entity or the hospital that that uh sold this drug to a Medicaid patient. So one of the lines we hear when talking about 340B is that the only entities that are paying are the pharma companies, right? It's not affecting the prices that any anybody else pays, right? It's not affecting consolidation. It's just those evil pharma companies that are paying for this program. Is that true? What do you say to that?
SPEAKER_00If you look at the report, we kind of say that there are three fundamental problems with the system of buy low, sell high. We mentioned assistance isn't going to the needy, it's going to the more wealthy hospitals. It does incentivize consolidation, but it does increase federal program costs. It does increase commercial premiums, private sector premiums, because the way it works is there's an incentive for these uh entities to use higher price drugs, more volume of drugs. There's data and literature out there that shows they use less biosimilars than non-340B hospitals. I think an example, I believe that Humara has 10 interchangeable biosimilars. And it's the number, it's either the number one or number two administered drug in the state of Minnesota. Well, why would that be? And the sole reason is because they want to capture that 340B revenue. So it does have an impact on what people with private insurance pay in their premiums. It has an impact on a Medicare program. I mean, consolidation writ large also has an effect in terms of what individuals pay in premiums. So there is a substantial distortive effect. And I think if you look at it, again, a small program with flaws, you can overlook. And the analogy I use is if you have a foundation uh with a 300-foot uh square foot shack on it, the faulty foundation isn't gonna collapse the house right away. But if you build nine stories on it, it starts to really uh you see those cracks pretty, pretty prominently. And I think that's what we're seeing with this growth of the program. I mean, one of the things you mentioned, the Minnesota report, this is a program ostensibly designed for safety net tax-exempt hospitals. There is more money going to for-profit companies or Fortune 50 companies than there are to, I believe, most of the sole community hospitals out there combined because of that contract uh pharmacy phenomenon. So there's a lot of leakage of the money, billions of dollars going to Fortune 50 companies, a lot, not a lot of money going to truly safety net hospitals. And so I just say explain that a little further.
SPEAKER_02How these because it's not just the hospitals making money, right? So the the pharmacies, contract pharmacies make money. And then I know there's there's the Hursa prime vendor program as well, which is a for-profit company. So it's not just these not-for-profit hospitals making companies. You're saying there's actual middlemen making money off of this program as well?
SPEAKER_00Yeah, I think Minnesota said 16% of all 340p revenue was going to for-profit companies. And it some of them, these are not small companies. And I mean, you mentioned the prime vendors, but I mean, there's a whole cottage industry that has just blossomed trying to teach hospitals how to maximize their 340 V revenue. And so it's the third-party administrators of the program, but it's really the contract pharmacies. And mention they originally in 1996 they changed the reg to say, hey, if you didn't have a pharmacy in-house, you can use one off-site in 2010 through sub-regulatory guidance. They just said you can have as many as you want. And so now we have a situation where you can have a hospital in Chicago that they have a pharmacy in Arizona. I think there may be one in Hawaii. So you have some of these hospitals that have 300 plus uh contract pharmacies, and then you layer on top. Okay, or are they working with specialty pharmacies? And so you see a lot of leakage for what was supposed to be pharma subsidizing hospitals going to for-profited uh entities.
SPEAKER_02Right. And I think the interesting thing, that's actually pretty challenging, is this definition of patient as well, right? So if I go to a doctor in Chicago, uh, they may claim me as a patient when I then show up uh at a pharmacy in Arizona to get a prescription filled. Uh, and there it's really difficult to track do I belong to just one entity as a patient or do I belong to multiple entities? I think it's interesting that the patient isn't even really well defined in the statute as well.
SPEAKER_00Well, I mean, it it the patient isn't defined. In fact, uh Chairman Cassidy of the help committee, he released a report uh last year and one hospital said, well, it's not even the intent of the program to give discounts to to uninsured patients. So we don't do that. And so said the quiet part out loud. Yeah, they I was kind of shocked that they did. I just think that if we're gonna say, as a public policy matter, we want pharma to subsidize hospitals, we can do it in a more direct, transparent way rather than reliance on this drug arbitrage that we know the the central pillar of that is going to have most of the assistance going to uh wealthier hospitals. And it has a whole host of unintended consequences like incentives to consolidate and increased uh drug utilization, less use of biosimilars. I think we should just say, okay, we're gonna be honest, pharma, you're gonna pay a fee, uh, it's gonna go to HHS, and we're gonna use a formula to decide uh how the money gets distributed to make sure that it actually goes to needy hospitals, those that have a lot of uncompensated care, a lot of Medicaid, and those hospitals that are having high amounts of commercial insurance that that don't need it. The the ones that are building uh wings that have a million dollars and grand piano and chandeliers. I think, you know, one one example that I use quite a bit is Cleveland, right? So Cleveland Clinic, uh, you know, they they actually got their 340B eligibility through uh this 1996 or I'm sorry, uh 2016 change, where they're they're a rural referral center. So they don't even have to meet the 1175, they can meet at 8%, even though they're in downtown Cleveland. But their Medicaid and uninsured rate is payer mix is about 15%. Their Medicare is around 51% and commercials 34%. Then you have a truly safety net hospital that's Metro Health in Cleveland, they have their Medicaid and uninsured is three times as much as Cleveland Clinic. Their commercial insurance rate is, I think, 10% below Cleveland Clinic. It's Cleveland Clinic that's making the most off the 340. Program, even though it's Metro Health, it's taking care of the indigent patients of Cleveland. I don't think that's the public policy outcome we want, particularly when you add on all of these other distortive effects of the 340B program.
unknownTrevor Burrus, Jr.
SPEAKER_01The Humera case is just such an interesting case study in how this all works and why some of the policy proposals you have while they are the way they are, correct? Because here's a great example of a year after um there being biosimilars on the market substantially equivalent to Humera. You still have Humera, which is much more expensive with 97% market share. And that leads to this idea that, well, okay, you can't just have competition. There's something else that's kind of stifling that. And you have, of course, talked about the rebate trap, right? And the idea that it makes a lot of sense. There there's no incentive when you have the pharmacy benefit managers selecting drugs to be on formulary for based on the rebates that they can get, meaning that difference between the list price and the net price, correct? And why choose anything else?
SPEAKER_00Yeah. Well, that's definitely a factor. I do find it interesting that once the PBM started manufacturing their own biosimilars, suddenly that they were willing to put them on formulary.
SPEAKER_01So that's so that's what I was going to bring up next, actually, right? And so the PBM is so eventually, I mean, that was one year after the 97% market share, and then I think a year later the market share dropped. I mean, there was some significant entry by other players, that those other players being biosimilars created by the PBMs, right? So okay, PBMs are working uh to reduce because here you have cost reduction that's driven by the PBMs exactly as you want to do.
SPEAKER_00I'll give you a uh sort of to me, the the Starkist case study on the rebate trial. So the first insulin biosimilar was approved in, I believe, 2020. They could not get on any formularies. So the next year, the same company, they got an interchangeable bios, interchangeable biosimilar insulin. And what they had to do was they actually had to have two separate products and they priced one way up high, and that would be the ones that they would uh try to get on formularies and get commercially insured patients or TVMs put on formularies, and they had to price it that high so they could give rebates. And then they had a another product that was priced at what is essentially the net price that cash paying patients could get. Because if they would have, because originally the first one that they originally got approved for, they actually set that price really low, kind of equivalent to what that net price would be. And again, they couldn't get on formulary, so they had to do this double pricing strategy. And to me, that just clearly shows about how distorted this list to net bubble is.
SPEAKER_02You're saying that's a sign the market's not working.
SPEAKER_01But there was some there was some shenanigans that the manufacturing, uh pharmaceutical manufacturer, in this case Ab V did as well, right? They had they understood that the patent cliff was coming and they uh kind of played the game of when the contract when the contract was signed, and the contract was signed right before that. So there was a period of time where there was the PBMs were locked. And then the other thing that was especially troubling was the fact that Ab V apparently said, Hey, if you don't play ball with us when it comes to putting Humera on formulary, then there's these two other drugs that there is no generic equivalent, and you're not gonna have access to those. So this what are your any thoughts on thoughts on that?
SPEAKER_00Well, I mean, what's the term that people use? Rebate grouping, I think is uh the term or something like that. I hadn't heard that for Humera. That's been allegations on others. But I mean, to me, the sarcast thing is when we pass the biosimilar legislation, and then people want to make changes, we need to make it easier to get interchangeable biologics. And this is roughly equivalent. Someone would say an interchangeable biologic is more like a generic than a regular biosimilar. It's like a generic. And why don't we have the same dynamics working um with biosimilars that we do with generics, right? Generics, you get the first one on the market, you get a probably a 10% discount off the brand. Usually that happens when the first generic has 180 days of exclusivity. You get the second one on the market, it goes down to 50%. And then when you get three or more, you that's when you really start getting down to 90%. Now, granted, biosimilars are a lot more difficult to make. Generics can be more commoditized, but we hadn't seen that even in a situation where you have 10 biosimilars again to what you said, then they weren't putting on the market until they started manufacturing them or co-branding themselves. And sometimes they they don't even manufacture, they just say, hey, we need to co-brand. Um, and once they co-brand and they get a deal for that, then they put it on the formularies. I guess I'm the type that I prefer when competition is based off of quality and price. And the more we can do to strip down the system where that's the those are the two overriding factors, I think that we gotta we gotta look for ways to do that. And to me, getting getting rid of that that net to list bubble, which really is an artifact of sort of a random antitrust Supreme Court case back in the 80s, um, and allow people to do upfront discounts. I know Mark Cuban's talked about, well, if we could just have the wholesalers pay the net price, then everything flows down from there. So I'll try to figure out a few of the details of how that would work. But conceptually, I think that's kind of where we want to go. Let's let's have them negotiate discounts upfront, and then people will be competing more on price and less on rebates. And then there is also the question of insurance design and rebates and the vertical integration of insurers with PBMs and pharmacies, and does the medical loss ratio come into that in terms of can they park profits in subsidiaries so it doesn't affect their medical loss ratio? So that's the unfortunate thing about healthcare is there's like it's somewhat complicated and there are a lot of different sort of facets going on that can impact various policies.
SPEAKER_02It's not complicated. Can you uh actually go back and tell us a little bit more briefly about that Supreme Court case that kind of cemented this net to list bubble into healthcare practice?
SPEAKER_00Yeah, I think it was 1987, but they basically said under Robinson Patman Act that uh you can't have discriminatory pricing. And so you got to provide the same price to pharmacy down the street that you do to the one in the next town over. And so what that did was it created this really it supercharges rebate structure where they say, okay, well, I want to get on formulary, but I got to provide everyone the same price. So how do I distinguish my pricing differential? And uh, and that's where they came up with sort of the the back end rebates where you provide a rebate based off of volume after the fact. And so that at least is sort of what has been explained to me is the major impediment to doing upfront rebates. Uh and then there or upfront discounts, and then there's also questions of how does best price going back to Medicaid best price, how does that fit into it? Because you're gonna have a floor on what you uh what you can price it at because uh you don't want to implicate that best price. So um, but that 1987 case was sort of the genesis of not doing not being able to do upfront uh discounts and having to do after-the-fact rebates.
SPEAKER_02Interesting. So uh once again, we need Clarence Thomas to save us all from this. So I think broadly you spoke about transforming 340B into capped safety net grant funded by Pharma. I think you and I are in agreement there. I've certainly published on that. I think you have as well. Um I think the Medicaid drug rebate program needs significant overhaul if we're going to bring more price and quality competition back in. I think one of the other issues with the MDRP is that it made it so if a Medicaid program accepts one drug from manufacturer, it has to uh uh accept their entire portfolio of drugs, right? So it really got rid of the ability for Medicaid to to have their own formularies and tiered pricing. And so I think that that's one of the issues. I don't know. What other broad strokes would you recommend to get everything back to where it should be for a healthy market?
SPEAKER_00I I'd say one other thing, distortion or impediment from the the best price regulations of rebate programs is we mentioned Savaldi and some states wanted to go to a subscription-based model. Other people want to do that.
SPEAKER_02Louisiana, I think.
SPEAKER_00Louisiana others want to do uh things like the value-based purchasing for gene therapies. So you only pay for it if it works. Well, if that's the case, what's your price if they're giving it back? And so there's things that I think that we would want to encourage that are are restricted because of the the Medicaid rebate program. But I've just I focused a lot on 340B. I think 340B that there are so many distortive effects that that emanate from that, not just in drug pricing, but throughout the healthcare system. Again, we talk about things like site neutrality and what that does for hospitals compared to independent physicians. And we've seen the number of independent physicians dwindle as hospitals uh employ more and more physicians in-house. And to tell you the truth, I don't blame a proprietor in an independent physician practice for doing that because the deck really is stacked against them. You have non-site neutral payments where a hospital gets a bigger payment for the same exact service than you can get in a physician office. And then on top of that, you have 340B. Um, and then not to mention all of the sort of the Medicare reporting requirements and paperwork requirements, Medicaid paperwork requirements, that we got to do something to sort of even the playing field, or if not, we're just gonna have a bunch of big sort of conglomerate health systems that control every aspect. And when that happens, I think what you see is increasing prices and decreasing quality. And so I think that if we can tackle that, that would be a big thing. I think one other thing, and this is not necessarily drug pricing, and this is a much larger endeavor. We have so many different ways that we subsidize hospitals from a federal government perspective and a state government perspective. And it's coming in all sorts of different ways. Most of the time, again, it's not just the 340B program, it's a whole host of programs. It's like we're it's done in the name of poor hospitals. And it's not the poor hospitals that are getting the benefit or the lion's share of the benefit. It's it's richer health systems. So I would say let's find a way to take those, whatever the number is, 81, 18, and try to condense them and figure out from a public policy perspective what is it that we want to subsidize. And I think what we want to subsidize is making sure that patients have access to hospitals, no matter where they live. Um and that means probably providing a little bit more to struggling hospitals to take care of a lot of uninsured patients and a lot of Medicaid patients, and maybe less federal money and and state money going to really toward wealthier hospitals that they're taking advantage of the 340B program. They're using that 340B revenue, and that's what's sort of the fuel that allows them to go out and buy these physician practices. So we're kind of federal policy is actually accelerating the thing that everyone is complaining about.
SPEAKER_02Gosh, it's like you've listened to every episode we've done. Uh Anish, maybe we need to create a doctor's on drinking game. And for every every time we mention 340B or consolidation, our audience has to take a drink, I think. That would get out of hand quickly, Anthony. It would get very quickly.
SPEAKER_01All right. Anish, any last thoughts? No, this isn't great. Thanks so much for talking us through uh a lot of these different things. Oh, well, I guess what everyone seems to agree that 340B pricing is and does anyone like there's not real serious discussion on either side, right? It's it's relative to would you say it's relatively bipartisan that 340B is abused and should be reformed significantly?
SPEAKER_00No, I I I don't think it is. Um I think the people that like the status quo, like I said earlier, I think they they do a very effective job of providing the impression that 340B revenue goes to poor hospitals and that if you um if you change the program in any way, that uh it's the poor hospitals that are gonna have the money taken away. Um really the focus is on to me, the focus should be how do we change how the money flows so it actually goes to the hospitals that need it, and then again, taking away some of these these other distortions. So I don't think it's a universally uh held position that that it's needs to be reformed. I think there are very entrenched interests that uh that are fighting very hard to make sure that there are no reforms to the program.
SPEAKER_01Does it break down by party?
SPEAKER_00I I think somewhat uh it does. Historically, it's been looked at that at least on the hill, that there are more Republicans that want to do reform than there there are Democrats. I think that that is changing.
SPEAKER_01I think uh you think the votes are there on the Republican side to get meaningful 340 degree reform?
SPEAKER_00I think there are, but I do think there's a question on what meaningful means. I tend to think meaningful, if you're saying we do a patient definition and we do transparency, that would be meaningful, and it probably is, but to me it it's sort of like polishing the rough edges off the problems. It doesn't actually fundamentally fix the problem. And you you won't get to real reform until you take away that drug arbitrage as the mechanism for generating revenue, because that in and of itself is what's always going to advantage those hospitals that have that better payer mix.
SPEAKER_02Yeah, if you just tweak the formula, they're just gonna find a new way to game it. I'm with you. I think the CAP Safety Net grant. One of the other ironies with the program is it is an outpatient drug program, and we use an inpatient metric to measure who qualifies, which is also doesn't make any sense. And if you are a safety net hospital, you got no problem getting your Medicaid patients into the ER and getting them admitted because you just simply don't offer any clinic appointments. And there's plenty of studies that have shown Secret Shopper where patients will call up, pretend they're a Medicaid patient, and they don't get appointments, and that's why Medicaid ended up going to the ER, and then you get your inpatient dish number up and you qualify for 340B and you get that arbitrage.
SPEAKER_00I just don't see why uh we should feel sort of hemmed in to saying we have to keep this structure of a program, and any reform has to be within its four walls. When the policy itself was passed 34 years ago, uh it affected 90 entities. It's a completely different program now. Money is flowing in a completely different way than than was intended when we uh when that program was established in 1992. So we shouldn't feel confined to that. We should look to what are policies that actually get the public policy outcome that we want.
SPEAKER_02Yeah. Judge legislation by its outcomes, not by its intent. I think is important here. All right. Ryan, thank you so much for spending the evening with us. It's been a pleasure. Everyone, please read uh Ryan's paper on the 340B program through USC Schaefer. Uh Ryan is RC Long, 1997 on X. Please give him a follow and thank you for listening. Thanks for having me. Thank you.
SPEAKER_00Appreciate it.